Ex-Illinois Governor Pleads Guilty in Loan Fraud

AP

Published: August 6, 1987

CHICAGO, Aug. 5—
Former Gov. Daniel Walker of Illinois pleaded guilty today to fraud and perjury charges resulting in part from improper loans arranged for him from his own savings and loan institution before it went bankrupt.

''I have broken the law and pleaded guilty,'' Mr. Walker read from a statement after entering his plea before Federal District Judge Ann C. Williams. ''I have deep regrets and no excuses.''

Mr. Walker, a Democrat who was Governor from 1973 to 1977, faces a maximum of 15 years in prison and $505,000 in fines.

Anton Valukas, the United States Attorney here, said at a news conference earlier today that the former Governor had agreed to plead guilty to charges of bank fraud, misapplication of bank funds and perjury and had agreed to cooperate ''in this and related investigations.'' Mr. Valukas declined to elaborate. Institution Declared Insolvent

Mr. Walker, who will be 65 years old on Thursday, was chairman and chief executive officer of the First American Savings and Loan Association in Oak Brook, a suburb of Chicago, in the time covered by the charges.

In April 1986 First American was declared insolvent by the Federal Home Loan Bank Board and put under conservatorship of the Government.

Mr. Valukas said Mr. Walker's involvement in loans issued by the institution, while fraudulent, did not play a role in its downfall.

He said that when Mr. Walker's own borrowing from First American reached the limit allowable under Federal banking regulations, the former Governor asked his son, Daniel Walker Jr., and a close friend, Robert McCarthy, to seek loans from First American. Misapplication of Funds

Mr. Valukas said the elder Mr. Walker then used about two-thirds of the more than $265,000 they borrowed to meet personal obligations. Those transactions resulted in the charges of misapplication of bank funds.

The perjury charge stems from denials that the elder Mr. Walker made to bank board investigators in the spring of 1986 when they tried to learn whether he had received proceeds from a loan made to a family member.

Mr. Valukas said the bank fraud charges involved $1.1 million in loans from five banks in Illinois, Florida and Arkansas to Mr. Walker or companies in which he held a substantial share of ownership. The charges said his loan applications failed to include about $3 million in liabilities and overstated his income.

Mr. Valukas declined to say whether the loans from First American to Mr. Walker's associates, or from the five other financial institutions to Mr. Walker himself, had been repaid. Chicago Confrontation in 1968

Before he became Governor, Mr. Walker served as chairman of the commission that investigated the confrontation between the Chicago police and antiwar demonstrators at the Democratic National Convention in 1968.

Two other former Illinois Governors have had legal troubles in recent years.

Otto Kerner, a Democrat who was Governor from 1961 to 1968, was convicted in 1973 on charges of bribery, tax evasion and perjury. He was sentenced to three years in prison but was paroled in 1975 because of ill health.

Mr. Kerner's predecessor, William G. Stratton, a Republican, was indicted in 1964 on charges of failing to pay Federal income tax on nearly $94,000 in unreported income while in office, but was acquitted in 1965.